NE Gas Grid to be expanded to other countries
As part of India’s larger energy diplomacy, the government is planning to extend the North Eastern Gas Grid (NEGG) to neighboring countries such as Bangladesh, Nepal and Bhutan after its completion in the next two months. According to officials of the petroleum ministry, work on the NEGG, which aims to create a natural gas pipeline network in northeastern India, is nearing completion. Once finished, it will be connected to the national grid and then to the other countries. Later, the government will also expand the pipelines to Sri Lanka and Myanmar. “The proposal was sent to the Ministry of External Affairs, and they would further decide how to take it forward. They would talk to the concerned neighbouring countries for implementation of the project,” said an official. The purpose of the move is to promote cross border energy trade and South Asia first policy. India planned to connect Myanmar and Bangladesh through an LNG pipeline, but later it was shelved. The national gas grid is already operational, but interconnections at a few locations are yet to be completed. It will be connected with the northeastern gas grid in the next two months. The official also mentioned that this move will increase natural gas production in the country, as ONGC (Oil and Natural Gas Corporation) is currently unable to produce much gas due to supply issues.
Oil India Ltd clocks its highest-ever crude oil, gas production in FY2023-24
State-run Oil India Limited (OIL) has achieved its all-time high production of crude oil and natural gas of 6.53 MMTOE (Million Metric Ton of oil equivalent) in FY2023-24, said Petroleum Minister Hardeep Singh Puri on X in a post on Wednesday. Stressing on the role played by public sector energy companies in ensuring India’s energy security, Puri said on X, “India continues ahead in its journey towards energy security & self-sufficiency under visionary guidance & leadership of PM @narendramodi Ji. Our public sector energy companies are making significant contributions to give momentum to this journey.” “Kudos to the fully integrated energy Maharatna @OilIndiaLimited for achieving their all-time highest production of crude oil and natural gas of 6.53 MMTOE in FY 2023-24. This achievement has been made possible by drilling a record-breaking 61 wells and 288 workover jobs by Team OIL,” said the minister on X. Oil India produced 3.35 MMT oil, 3.182 BCM gas in FY2023-24 According to the figures shared by Oil India Limited with PSU Watch, in FY2023-24, the Maharatna PSU produced 3.35 MMT of oil, which was 6.01 percent higher in comparison to the last fiscal year, and 3.182 BCM of natural gas, which was 0.06 percent higher year-on-year. In FY2022-23, OIL produced 3.18 MMT of crude oil and 3.18 BCM of gas. In 2018-19, OIL had last recorded a high oil production of 3.32 MMT, which is close to the highest-ever figure of 3.35 MMT. The 6 percent jump in Oil India’s crude oil production assumes significance as it comes against the backdrop of a steady decline in India’s overall crude oil production. In a recent interview with PSU Watch, Oil India CMD Dr Ranjit Rath explained how the PSU has managed to keep its crude oil production growing by following an aggressive, production-intensive strategy. “We are actually pursuing very aggressive, production-intensive interventions. We are looking into wells which were earlier considered sick and bringing them into production. We are looking at hydraulic fracturing to enhance our production. We are looking at enhanced oil recovery as part of our production campaign. We are also looking at putting electric submersible pumps to enhance production. We are looking at new areas through near-surface exploration where we are going to drill and also discover. We have also undertaken a very successful cyclic steam stimulation initiative. So due to this overall campaign, we are getting results,” Dr Rath said.
EV adoption may pose threat to CNG firms dominance in India: Report
Electric vehicle (EV) adoption may pose a threat to the “dominance” of compressed natural gas (CNG) sector in India, according to a report released on Tuesday. Indraprastha Gas Limited (IGL) reports high growth but the city gas distributor’s future may be limited amid the EV surge – a trend reported for such companies in China, said the report by finance house Prabhudas Lilladher (PL). Transition to EVs Last November, the Delhi government mandated cab aggregators and delivery service providers to transition their entire fleet to electric vehicles by 2030. This move, although in its early stages, suggested that the traditional dominance of CNG and liquefied natural gas (LNG) might face challenges. The policy mandated a gradual transition to EVs, with 100 per cent of the fleet required to switch within four years, significantly impacting IGL’s volume, where CNG currently accounted for 75 per cent of total sales. Additionally, Mumbai’s public transport operator, BEST, awarded a tender for 2,400 e-buses to an original equipment manufacturer (OEM). The buses were expected to be deployed within two years, indicating the growing momentum of EVs in the transportation sector. CNG/LNG sales in India According to the PL report, IGL has had a compound annual growth rate (CAGR) of 8.4 per cent in total gas sales over the last decade. However, concerns arose regarding the sustainability of this growth due to the increasing popularity of EVs. According to PL’s analysis, CNG sales represented 75 per cent and 73 per cent of IGL and Maharashtra Natural Gas Limited’s (MGL) total volume, respectively, in the first nine months of Financial Year 2023-24 (FY24). MGL experienced a lower trajectory of 4.9 per cent CAGR over the past decade. Similar to IGL, MGL also faced a high exposure (72 per cent) to the CNG segment, leading to muted volume growth prospects amidst the EV surge. This has raised greater concerns due to limited avenues for growth for the entity. As a result of these findings, Prabhudas Lilladher downgraded IGL’s rating from ‘hold’ to ‘reduce’ with a target price (TP) of Rs 382 based on 14x FY26 earnings per share (EPS). Similarly, MGL’s rating was downgraded from ‘reduce’ to ‘sell’ with a TP of Rs 1,124 based on 12x FY26 EPS. Despite trading at a peak of 24.3x in FY18, MGL’s current valuation at 14.6x FY26 EPS suggested potential further de-rating in the future, according to Prabhudas Lilladher. China’s declining CNG/LNG sales amid EV adoption Drawing parallels with Chinese City Gas Distribution companies (CGDs), which had faced declining CNG/LNG sales amidst EV adoption, PL predicted a similar fate for IGL and MGL, both heavily reliant on CNG (70-75 per cent dependence). The impact of EV adoption on China’s CNG/LNG sales served as a cautionary tale. In recent years, China has witnessed a decline in CNG/LNG consumption due to the rapid introduction of new EV models. Companies like China Gas Holdings, ENN Energy, China Resources Gas, and Kunlun Energy have experienced significant decline in gas sales. Their CNG/retail LNG sales have decreased at CAGR ranging from 6 per cent to 21 per cent in the past few years.
Russia continues to remain India’s top crude supplier; imports rise 7% in March
India received 1.36 million barrels of crude oil in a day from Russia in March, according to energy cargo tracker Vortexa. This was 7 percent higher than in the previous month, as India had imported 1.27 million barrels per day (bpd) from Russia in February. India’s imports from Russia exceeded supplies from other countries, including Iraq and Saudi Arabia, in March. India’s total import of crude oil increased to 4.89 million bpd during the month from 4.41 million bpd in February, according to information from Vortexa. Currently, crude oil prices are hovering around $85 per barrel, but have not crossed the $90-per-barrel mark. Imports from Russia have been high despite US sanctions on one of the country’s biggest tanker groups late in February. To reduce Russia’s revenue from oil sales, the US had imposed sanctions on Sovcomflot, a Moscow-based shipper, for allegedly violating the price cap on Russian exports. According to a Reuters report, India’s Reliance Industries had thereafter halted buying Russian oil loaded on tankers operated by Sovcomflot. Meanwhile, sour-grade oil from the Urals was India’s major import from Russia. Other Russian oil grades imported by India include Varandey, Siberian Light and Sokol (from Sakhalin I).
Chinese Investments In U.S. Shale Gas Have Been Bad For The Sector
The United States is currently experiencing a post-pandemic boom in foreign direct investment (FDI), thanks in large part to new industrial policies that incentivize U.S. manufacturing investment such as the Inflation Reduction Act (IRA) and the CHIPS Act as well as overall resilience of the U.S. economy. FDI in the United States increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021, with Europe accounting for the lion’s share of investment inflows. Unfortunately, the same cannot be said about investments from China. Annual investments from the world’s second largest economy has dropped from $46 billion in 2016 to less than $5 billion in 2022, with China ceding its former position as one of the top five U.S. investors to a second-tier player surpassed by countries such as Norway, Qatar and Spain. Well, maybe the U.S. energy sector is none the worse for wear. Usha Haley, professor of management at the Barton School of Business at Wichita State University, undertook a comprehensive evaluation of the implications of Chinese foreign investment in the U.S. shale gas sector. She notes that the U.S. is the largest producer of shale gas, with nearly 80% of the country’s 125.0 Bcf/d average production in 2023 coming from shale formations. Meanwhile, Haley notes that China only produces about half of the natural gas that it consumes, with a lack of technological expertise as well as economic factors making it opt to invest significantly in U.S. shale extraction instead as a source of imports. Haley and her team have found that while, in general, foreign direct investments can bring many benefits including promotion of international trade as well as the transfer of technology between countries, investment from less technologically advanced state-capitalist economies such as China can end up doing more harm than good. The researchers examined a wealth of data from the upstream (exploration and production), midstream (transportation and storage), and downstream (provision of final products) segments of the vast U.S. shale-gas sector. They then compared the impacts associated with the pre-Chinese (2000–2008) and post-Chinese (2009–2018) investment periods to determine how Chinese state-capitalist investments have altered technology development in the sector. The researchers have found unequivocal evidence that Chinese investments in U.S. shale have changed the trajectories of green technology in ways that are detrimental to the U.S. According to the team, this is the case because Chinese investors more often than not prioritize the immediate production of shale gas using established technology ahead of investing in the development of environmentally friendly shale-gas extraction technologies. Haley notes that Chinese investments in U.S. shale gas has had no impact in lowering emissions despite a large increase in regulatory pressure to lower green-house emissions in the sector. For instance, last year, the U.S. pipeline regulator unveiled new rules aimed at lowering methane leaks from the vast network of 2.7 million miles of natural gas pipelines in the country. The new rules could potentially eliminate 1 million metric tons of methane emissions by 2030, the equivalent of emissions from 5.6 million cars. A study published in Nature Energy has revealed that there are tens of thousands of inactive and unplugged offshore oil and gas wells inundating the U.S. Shale Patch, posing the risk of possible methane leaks into the ocean. In fact, there are more inactive and unplugged non-producing wells in the Gulf of Mexico coastal waters in Louisiana, Texas and Alabama than currently active wells. The study estimates that plugging and abandoning these wells would cost the industry a hefty $30 billion. China’s Shale Gas Bet Paying Off On its part, Beijing is hardly complaining, with years of investment in, and cooperating with, the U.S. energy sector starting to pay off. Last December, analysts at BMI, a Fitch Solutions company, told Rigzone that China’s state-owned companies are ramping up exploration and production of unconventional gas resources by leveraging expertise gained from western oil and gas majors. “State-owned companies PetroChina and Sinopec are experiencing some success in unconventional gas production as they accelerate exploration activities. The two largest producers, Sinopec and PetroChina, have gained considerable experience and are technically capable of producing shale and tight gas, having worked with oil majors such as Shell, Chevron, and TotalEnergies,” they said in the report. The analysts have noted that, since 2018, Beijing has maintained strong support for the exploration and production of shale gas as the country tries to become less dependent on imports. China’s Ministry of Land and Resources estimates the technically recoverable shale gas reserves to be 883 trillion cubic feet.
Seros Energy achieves 10,000-meter monthly drilling on CBM
Oil field services provider Seros Energy on Monday announced that it achieved a significant milestone by consistently delivering over 10,000 meters of wells on a monthly basis, exclusively for coal bed methane (CBM) drilling projects across India. The company also made a noteworthy indent as an Indian service provider to execute more than 200 hydraulic fracturing jobs assisted by coiled tubing in the Eastern CBM belt while unlocking pay zones with some of the most significant fracking jobs executed in the CBM reservoir, per the company. Seros Energy MD & CEO Ashish Agarwal said, “As the world transitions towards cleaner, sustainable energy sources, Seros Energy is at the vanguard, pioneering a more efficient future for CBM exploration in India. Our unwavering commitment to innovation and environmental stewardship transcends mere business strategy; it is a steadfast dedication to cultivating a sustainable energy landscape that will benefit generations to come.” The company’s expertise is sought after by major players in India’s CBM sector, including Essar Oil and Gas Exploration Production, Reliance Industries and ONGC. The contract drilling services provider offers specialised services such as Hydraulic Fracking and Well Services. Besides, it is a leading coastal fleet operator with over 40 marine assets, offering a wide range of services such as Cargo movement, Harbour operations, Lighterage, and Dredging.
ADNOC Gas makes $13bn LNG commitment
ADNOC Gas is to invest $13 billion in domestic and international opportunities in the next five years and aims to more than double its liquefied natural gas (LNG) production capacity by 2028. The $65 billion top 20 oil and gas company included the commitments in its 2023 results, in which it recorded a net income of $4.7 billion. Dr. Sultan Ahmed Al Jaber, Chairman of ADNOC Gas – the integrated gas processing unit of ADNOC – said the investment will increases its EBITDA by up to 40% by 2029. He said last year it made substantial investments, awarding contracts worth $4.9 billion to expand its processing capacity, which will provide additional sales volumes of up to 20%. “Our international sales momentum grew in 2023 with the signing of LNG export agreements worth up to $12 billion, securing our returns in the coming years and capitalising on the increasing global demand for LNG as a transition fuel,” he said. “We are looking to increase our LNG export volumes in a growing global market. Our aim is to acquire the new Ruwais LNG plant and more than double our LNG production capacity by 2028.” ADNOC has announced its intention to take a final investment decision (FID) on the Ruwais LNG project in 2024. AG Image for 646726165InDr. Ahmed Alebri, CEO of ADNOC Gas, said its strong financial performance underpins its confidence to expand its global footprint and explore new revenue streams. “We aim to expand internationally by acquiring new positions in the gas value chain, targeting opportunities in Europe, India, China and South-East Asia if they add value to our business,” he said. ADNOC Gas is well-positioned to benefit from ADNOC’s planned expansion of oil production capacity to five million barrels per day (bpd) by 2027. The company will continue to expand its natural gas pipeline network and develop infrastructure to boost gas supply for its petrochemicals growth in Ruwais. ADNOC Gas aims to enhance operational efficiency through decarbonisation, digital transformation, and artificial intelligence (AI)-led technology innovation, which is expected to yield savings of up to $400 million annually.
Indian Oil Corp Shifts To Spot Market As Russian Contract Ends: Report
The oil supply agreement between Rosneft and Indian Oil Corp, which expired in March, has not been renewed due to disagreements over price and volumes, according to a Reuters report citing sources familiar with the matter. As a result, India’s leading refiner has resorted to spot markets. The annual oil deal between IOC and Rosneft signed initially during Russian President Vladimir Putin’s visit to India in December 2021, was renewed for a second time a year ago, just months before Moscow’s military involvement in Ukraine. According to the report, the term contract between the state-run Indian Oil Corporation (IOC) and Rosneft expired on March 31st. It further added that the agreement for 2024-25 has yet to be renewed. IOC and Rosneft may still reach an agreement for the deal if they can come to terms, states the report. In the interim, the Indian firm plans to procure Russian oil from the spot markets. New Delhi has been capitalising on discounted Russian oil as Western nations refrained from purchasing and imposed sanctions on Moscow following its invasion of Ukraine, with Russia emerging as the primary supplier to the world’s third-largest importer. Under IOC’s annual oil purchase contract with Rosneft, the agreement entailed a monthly supply of 1.5 million metric tons (equivalent to 360,000 barrels per day) at a discount ranging between $8 and $9 per barrel to Dubai quotes on a delivered basis. IOC, along with Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), were in the midst of negotiations with Rosneft for an annual contract starting from April 1, aiming to secure up to 400,000 barrels per day of oil, as per a previous Reuters report. However, Rosneft’s proposal fell short of expectations, offering only 4-6 cargoes per month, totalling up to 4 million barrels. This was significantly below the collective requirement of the Indian refiners, according to the report. Additionally, Rosneft’s offer included a discount of $3-$3.50 per barrel compared to Dubai quotes within the term deal, similar to prevailing rates in spot markets, indicated the report.
Crude oil’s climb towards $90 per barrel is a matter of anxiety for India, oil secretary Pankaj Jain says
Crude oil’s climb towards $90 per barrel is a matter of anxiety for India, oil secretary Pankaj Jain has said. “Whenever prices go up, it does cause anxiety, cause concern,” Jain said. Brent, the international crude benchmark, has risen to $89 per barrel, adding $15 in about four months. “Does it stop at $90? That’s the matter of anxiety,” Jain said. India is the third-largest importer of crude in the world and imports 88% of its requirements. The impact of high prices can be gauged only if they are sustained for long, Jain said, adding that if prices stay this way for a month or longer, companies will respond appropriately. Geopolitics and traditional summer demand were driving up prices, Jain said. An Israeli attack on the Iran embassy in Syria on Monday, which killed some of the senior Iranian military officers, is threatening to widen the conflict in the Middle East. Fuel prices get a usual boost during summer, helped by increased holiday travel and air conditioning demand. “Either crude prices go up or cracks go up (in summer). This year so far, crude prices have gone up, cracks haven’t gone up,” Jain said. India imports about 88% of the crude it consumes. Refiners are expected to regularly align domestic prices of fuel with international rates. After extreme volatility hit the global oil markets in 2022, state oil companies stopped regular revision of prices. They have recently cut retail prices of both petrol and diesel by Rs 2 per litre.
Russia’s Sokol Crude Starts to Move to India Again via Traders
Despite stricter enforcement of the U.S. sanctions against Russian oil exports, some tankers loaded with Russia’s Sokol crude grade are near India signaling Indian ports as their destinations, vessel-tracking data compiled by Bloomberg showed on Tuesday. After more than a year of gorging on cheaper Russian crude, Indian refiners began to avoid Sokol shipments at the end of last year and avoid taking delivery of crude loaded on tankers of Russian state fleet owner Sovcomflot, following the ramp-up of U.S. sanctions on Russia. It now appears that some of the Sokol trade may have returned, via traders offering attractive discounts, refining sources have told Bloomberg. According to the ship-tracking data the newswire has compiled, three tankers carrying Sokol crude are near India’s west and east coasts. It’s not clear if they would discharge in India and whether issues with delivery and payments due to the sanctions have been overcome, Bloomberg notes. The U.S. levied new sanctions against Russia in February on the second anniversary of the Russian invasion of Ukraine and in response to the death of opposition politician Alexey Navalny. Among the 500 targets of the new sanctions, the U.S. Treasury and State are targeting Sovcomflot and more than a dozen tankers linked to the Russian state-owned firm. Stranded cargoes of Sokol, previously headed to India but idled off South Korea and Singapore since the U.S. stepped up sanctions enforcement, started to make their way to China last month, beginning to clear a backlog of more than 10 million barrels of the grade sitting on tankers at sea. After the sanctions on Sovcomflot, all Indian refiners are said to be now refusing to take Russian crude transported on Sovcomflot vessels to avoid running afoul of the stricter enforcement of the U.S. sanctions on Russia. One of the tankers currently near the Indian coast, Vostochny Prospect, is owned and managed by Sovcomflot, per the Equasis international maritime database cited by Bloomberg.